George Orwell
2007-04-27 15:29:09 UTC
Wall Street Journal - April 27, 2007
TOKYO -- Ken Kutaragi, who created Sony Corp.'s PlayStation videogame
business, resigned yesterday, giving up his leadership role at the
company at a time when his biggest technological gamble to date -- the
PlayStation 3 -- is lagging behind rivals.
The electronics company said Mr. Kutaragi, the 56-year-old chairman and
chief executive of the Sony Computer Entertainment unit, will leave his
post in June, though he will serve as honorary chairman and support
Chief Executive Howard Stringer as senior technology adviser. In a
statement, Sony said Mr. Kutaragi "decided to pursue his dreams beyond
PlayStation."
The outcome of Mr. Kutaragi's bet on PlayStation 3, the most
technologically advanced videogame system on the market, remains
unclear. The cutting-edge technology Mr. Kutaragi put into the console,
including a Blu-ray disc drive that plays high-definition movies and a
high-performance microprocessor, came at a steep cost, causing delays
in the release of the PlayStation 3 and increasing its retail price to
$499 and $599 for two versions of the console, more than rival
machines. PlayStation 3 made its debut in November, and Sony currently
only sells the more expensive model with a bigger hard drive in the
U.S. and Europe.
While many game executives say Mr. Kutaragi's ambitious vision with
PlayStation 3 still could pay off, the console is in an unexpectedly
weak position compared with less expensive systems from Microsoft Corp.
and Nintendo Co. In March, U.S. retailers sold 259,000 Nintendo Wii
consoles http://snipurl.com/Nintendo_Wii , 199,000 Microsoft Xbox 360s
http://snipurl.com/Xbox_360 and 130,000 PlayStation 3s
http://snipurl.com/Sony_PS3 , according to NPD Group Inc.
Instead of being the hoped-for cornerstone of a recovery for Sony,
videogame-related losses for Sony's year ended in March are expected to
amount to $2 billion, or double original forecasts. That is expected to
drag down the company's overall performance despite improvements in
other businesses, such as televisions. Sony will report full-year
earnings next month.
Sony's predicament in videogames is all the more surprising given the
company's decade-long supremacy in the business with the first two
models of the PlayStation, a success widely credited to Mr. Kutaragi, a
brash engineer who joined the company in 1975. The PlayStation came out
in December 1994 and vaulted past Nintendo's machine as the best-
selling game console.
"His contributions to the growth of our industry are unparalleled,"
said Larry Probst, chairman of Electronic Arts Inc.
Mr. Stringer, nearly two years into the top job at Sony, has been
striving to revamp the company by getting its fractious business
divisions to work together to create products that better integrate
software. In the fall, Mr. Stringer effectively moved Mr. Kutaragi from
his position running day-to-day operations of the videogame unit, as
Mr. Kutaragi's communications issues with other senior executives
became an increasing problem.
Those issues were on display in September, when Mr. Kutaragi announced
Sony was halving shipments of the new PlayStation to the U.S. and Japan
and was pushing back its European launch. At a news conference, Mr.
Kutaragi blamed Sony's electronics group for failing to produce enough
of a critical component, exposing his tense relationship with the
division. "If I were asked whether Sony's quality of manufacturing has
declined, I would have to say 'yes,'" Mr. Kutaragi said.
Richard Doherty, an analyst at the Envisioneering Group who knows Mr.
Kutaragi well, says his decision to step down could also reflect Mr.
Kutaragi's fatigue from years of internal battles. Mr. Doherty said he
detected a change in Mr. Kutaragi's mood last year when he met with him
at a conference. "I think his first seeds of getting tired of shouting
were showing to me," he said.
To succeed Mr. Kutaragi, Sony said Kazuo Hirai, the 46-year-old former
U.S. head who was named president in the fall, will be promoted to
chief executive of its games division.
Sony declined to make Mr. Kutaragi or Mr. Hirai available to comment.
TOKYO -- Ken Kutaragi, who created Sony Corp.'s PlayStation videogame
business, resigned yesterday, giving up his leadership role at the
company at a time when his biggest technological gamble to date -- the
PlayStation 3 -- is lagging behind rivals.
The electronics company said Mr. Kutaragi, the 56-year-old chairman and
chief executive of the Sony Computer Entertainment unit, will leave his
post in June, though he will serve as honorary chairman and support
Chief Executive Howard Stringer as senior technology adviser. In a
statement, Sony said Mr. Kutaragi "decided to pursue his dreams beyond
PlayStation."
The outcome of Mr. Kutaragi's bet on PlayStation 3, the most
technologically advanced videogame system on the market, remains
unclear. The cutting-edge technology Mr. Kutaragi put into the console,
including a Blu-ray disc drive that plays high-definition movies and a
high-performance microprocessor, came at a steep cost, causing delays
in the release of the PlayStation 3 and increasing its retail price to
$499 and $599 for two versions of the console, more than rival
machines. PlayStation 3 made its debut in November, and Sony currently
only sells the more expensive model with a bigger hard drive in the
U.S. and Europe.
While many game executives say Mr. Kutaragi's ambitious vision with
PlayStation 3 still could pay off, the console is in an unexpectedly
weak position compared with less expensive systems from Microsoft Corp.
and Nintendo Co. In March, U.S. retailers sold 259,000 Nintendo Wii
consoles http://snipurl.com/Nintendo_Wii , 199,000 Microsoft Xbox 360s
http://snipurl.com/Xbox_360 and 130,000 PlayStation 3s
http://snipurl.com/Sony_PS3 , according to NPD Group Inc.
Instead of being the hoped-for cornerstone of a recovery for Sony,
videogame-related losses for Sony's year ended in March are expected to
amount to $2 billion, or double original forecasts. That is expected to
drag down the company's overall performance despite improvements in
other businesses, such as televisions. Sony will report full-year
earnings next month.
Sony's predicament in videogames is all the more surprising given the
company's decade-long supremacy in the business with the first two
models of the PlayStation, a success widely credited to Mr. Kutaragi, a
brash engineer who joined the company in 1975. The PlayStation came out
in December 1994 and vaulted past Nintendo's machine as the best-
selling game console.
"His contributions to the growth of our industry are unparalleled,"
said Larry Probst, chairman of Electronic Arts Inc.
Mr. Stringer, nearly two years into the top job at Sony, has been
striving to revamp the company by getting its fractious business
divisions to work together to create products that better integrate
software. In the fall, Mr. Stringer effectively moved Mr. Kutaragi from
his position running day-to-day operations of the videogame unit, as
Mr. Kutaragi's communications issues with other senior executives
became an increasing problem.
Those issues were on display in September, when Mr. Kutaragi announced
Sony was halving shipments of the new PlayStation to the U.S. and Japan
and was pushing back its European launch. At a news conference, Mr.
Kutaragi blamed Sony's electronics group for failing to produce enough
of a critical component, exposing his tense relationship with the
division. "If I were asked whether Sony's quality of manufacturing has
declined, I would have to say 'yes,'" Mr. Kutaragi said.
Richard Doherty, an analyst at the Envisioneering Group who knows Mr.
Kutaragi well, says his decision to step down could also reflect Mr.
Kutaragi's fatigue from years of internal battles. Mr. Doherty said he
detected a change in Mr. Kutaragi's mood last year when he met with him
at a conference. "I think his first seeds of getting tired of shouting
were showing to me," he said.
To succeed Mr. Kutaragi, Sony said Kazuo Hirai, the 46-year-old former
U.S. head who was named president in the fall, will be promoted to
chief executive of its games division.
Sony declined to make Mr. Kutaragi or Mr. Hirai available to comment.